Analysis by an industry leader has examined how the type of borrower affects the likelihood of a mortgage default

The Real Estate Institute of Western Australia (REIWA) has urged the state’s government not to consider ending the universal application of the first home owners grant in its up-coming midyear budget review, according to the institute’s website.

Currently, the state distributes the $7,000 grant to first home buyers irrespective of whether they are purchasing an established property or building a new one.

Some premiers in the eastern states have changed the rules for eligibility and will now only provide funds to first home buyers who build a home or purchase a newly built one.

The New South Wales and Queensland governments recently scrapped the first home buyers grant for people who buy a previously lived-in property as a means to stimulate their flagging construction industry.

However, that stimulus is not needed in WA, says the REIWA, especially when 75% of first home buyers in this state purchase second-hand homes, not new ones.

WA is presently experiencing the strongest non-stimulatory growth in first home buyer activity in both the established and new housing sectors since FHOG was introduced in July, 2000.

REIWA says now is not the time to distort the healthy recovery in the WA housing market.

First home buyer activity is currently very strong in WA, constituting up to 30% of all turnover around the state.

The state is also starting to see a healthy recovery in new building activity, which REIWA says has partly been led by first home buyers now representing 25% of this new activity.

“Meddling with the application of the FHOG now would greatly distort this healthy sector of the market and disadvantage three quarters of people trying to own their first home. The Commonwealth introduced this grant with the purpose of it having universal application to all first home buyers. This universality must continue in WA to keep this section of the market stable and to ensure fairness for all new buyers.”

REIWA is also encouraging the state government to maintain its transfer duty exemption for first home buyers in the forthcoming midyear budget review.

COMMENTS

by Incognito18/12/2012 9:44:19 AM

First home grants end up capitalised into higher prices.

No wonder the REI want's it to stay. Anything for higher prices..

Forego 7k now and prices will be subdued $30-40k in the future.

I like a good first home buyer as much as anyone, but feeding a price frenzy doesn't help.